Just as we warned, the avian flu in China has had a very significant impact on its KFC chain
It seems slashing prices did not do the trick – though we are sure this strain of the deadly virus is just a ‘storm in a teacup’ buying opportunity.
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Central bankers have gone totally mad. The stunning news of toady is a new pledge by Japan to double its monetary base in two years as the Bank of Japan Unveils Aggressive Easing.
The Bank of Japan will aim to double the monetary base over two years through the aggressive purchase of long-term bonds, in a dramatic shift aimed at ridding Japan of the deflation that has dogged the country for almost two decades.Haruhiko Kuroda on Thursday announced his arrival as central bank governor with a “new phase of monetary easing”, a move that comes after Prime Minister Shinzo Abe told the bank to target a 2 per cent rate of inflation.
“We can’t escape deflation with the incremental approach that’s been taken until now,” Mr Kuroda said after the announcement. “We need to use every means available.”
“I am confident that all the policies we need to achieve 2 per cent inflation in around two years are now in place,” he said.
Yen Plunges
As one might expect on such a surprise announcement, the Yen had a spectacular plunge.
Draghi Signals More Easing
Bloomberg reports German Yields Fall to 8-Month Low as Draghi Signals More Easing
German government bonds rose, pushing 10-year yields to the lowest since August, after European Central Bank President Mario Draghi signaled further stimulus is possible should economic conditions deteriorate.French and Austrian 10-year yields fell to records as Draghi said monetary policy will “remain accommodative for as long as needed” to boost growth. Spanish and Italian bonds pared gains as the ECB president said the central bank won’t immediately implement measures to ease funding strains for smaller companies.
Fed Uncertainty Principle
This is all in accordance with the Fed Uncertainty Principle corollary three.
Corollary Number Three:
Don’t expect the Fed [central banks in general] to learn from past mistakes. Instead, expect the Fed to repeat them with bigger and bigger doses of exactly what created the initial problem.
Japan is eventually going to achieve “escape velocity” on deflation, and I assure you Japanese citizens will not like the results when it happens.
When the Japanese bond market finally reacts to this inane policy, there is going to be a global currency crisis.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
We posted this chart previously, but it deserves repeating, for one reason: whereas conventional wisdom in the past was the due to the mutual assured trade destruction between China and the US (with China overly reliant on the US consumer and market for its exports, and the US desperate for Chinese purchases of US bonds as a USD-recycling and, more importantly, deficit-funding pathway), perhaps now that exports to the US as a percentage of total Chinese exports have fallen to an all time low, and with Chinese purchases of US bonds stagnant of 18 months in a row as the Fed’s monetization of US paper has replaced the marginal Chinese demand, perhaps it is time to rethink the increasingly unstable MAD Nash Equilibrium that exists between the countries: first in trade, and soon in all other aspects of socio-economic relations.
Source: Diapason
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